PROVIDENCE
– As the three major credit rating agencies have now downgraded Bally’s Corp.’s financial outlook into junk bond territory in recent weeks, the company continues to mull a major stakeholder's pitch to acquire it and take it private.
The latest downgrade came from Fitch Ratings on Monday, which reduced the Providence-based casino operator’s credit grade to "B" from "B+" and changed its outlook to “negative,” citing increased competition in online gaming and sports betting. This was preceded by downgrades from both Moody’s Investors Services and S&P Global Ratings.
Fitch cited the growth in sports betting and the "multiple land-based and digital operators entering the market, including Bally's," saying the "interactive business benefits the company's product diversification [but] Fitch does not expect it to be a material credit driver in the near to intermediate term.”
Bally’s on Feb. 22 reported its year-end loss narrowed to $172.6 million in 2023. In 2022, the hotel casino operator reported a loss of $425.5 million. It currently holds $3.6 billion in long-term debt, according to the credit agencies, which also cited the March 12 bid by board chairman and New York hedge fund Standard General’s largest shareholder, Soo Kim, to take over the company at a 41% premium and remove it from the stock exchange.
Standard General currently holds a 26.4% stake in the company and has proposed to acquire all of the outstanding shares for $15 per share. The news sent Bally’s stock price up 31%.
In a March 28 press release Bally’s announced it has formed a special committee to evaluate Standard General’s proposal, cautioning its stockholders “and others considering trading the company’s securities” that no decisions have yet been made.
As recently as 2022 a board rejected a previous offer by Standard General for $38 per share.
The downgrades could further harm Bally’s investment draw at a time when the company is involved in multiple land-based and digital initiatives, including a $1.5 billion stadium for the Oakland Athletics relocation to Las Vegas and a casino in Chicago.
Last month Bally’s CFO Marcus Glover told the Nevada Gaming Control Board the company has a $800 million shortfall to build its Chicago casino, according to the Chicago Sun-Times. The company increased debt by $163 million to fund development costs.
Bally's has entered into several lease-back deals while continuing to operate the casinos. It
completed its acquisition of the Tropicana Las Vegas from Penn Entertainment and Gaming and Leisure Properties Inc. in February 2023, agreeing to pay $148 million for the nonland assets of the Tropicana and lease the 35-acre parcel at the corner of Tropicana Boulevard and Las Vegas Boulevard for 50 years at an annual rent of $10.5 million, payable to Gaming and Leisure Properties Inc.
In January 2023 it sold the properties and buildings of Bally’s Tiverton Casino & Hotel in Tiverton and Bally’s Hard Rock Hotel & Casino Biloxi in Biloxi, Miss., to Gaming & Leisure Properties Inc. for $635 million, retaining control of gaming operations.
That $1 billion transaction included a stipulation allowing Gaming and Leisure to also buy and lease back Bally's Twin River Lincoln Casino for $771 million prior to Dec. 31, 2026, according to the company’s most recent earnings report. However that option hasn't been exercised.
Bally’s spokesperson Diane Spiers on Tuesday said the credit downgrades “will have no impact on our [Rhode Island] operations.”
Bally’s currently employs approximately 1,950 people in the state.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com
